The idea of buying Spanish property normally starts with a lovely vision of the great things, such as beaches, ocean views, green space and a warmer climate, on offer for a fraction of the price of the UK or other more affluent countries.
Then when you start getting serious you find that the properties are often not what they are advertised to be, that information about the relevant laws and processes is voluminous, confusing and sometimes deeply worrying …and then as often as not you meet someone who tells you in great detail about how friends of his sunk their life savings into a dream home in Valencia and were forced to pay the local authorities 150.000€ to demolish their house and build a road on the site instead.
In Galicia, at least, there is a clear process to buying a property and you are adequately protected by the law. That said, even if you do speak Spanish there is still a huge amount of new information to process, and when you add to the mix that purchasing property is one of life’s largest financial decisions and that very often you’ve already found a property which is driving whole the process thus applying considerable time pressure ….well, it’s extremely stressful and you’re probably feeling rather fearful and somewhat out of your depth.
The various reasons for hiring people (for example galiciaproperty’s search and purchase assist services) to help you purchase a Galician property are given many times over throughout this site, but there’s nothing like a real life example to see the process and decide if you would want help with it.
Case Study – a Galician Beach House
This case study is from 2013/14 and it’s actually a house my wife and I wanted to buy but ultimately pulled out of for the reasons described below. Step by step, this is how it went.
Spot the property listing on a website
In fact when I came across it the property was listed in two places, metasite fotocasa at 370.000€ (from an A Coruna based estate agent) and on second hand goods website milanuncios with a different agent at 450.000€. Both sites had a small selection of low quality photos showing what appeared to be a fairly large 3 storey house in a stunning location overlooking a beach and with a clifftop swimming pool.
Here are two photos I took of the property, one of the house and the second from the same spot looking at the clifftop pool and (south facing) view – it’s pretty clear what the attraction was!
Locate the property and google the surroundings
In time honoured tradition the property was advertised without an exact location, and so my next step is always to try to find it on a satellite view so that I can look around the locality without getting out of my chair. Sometimes this process is quite tricky but in this case knowing which beach was in the background and with a distinctive clifftop swimming pool to look for it took no more than a couple of minutes to spot the property on the edge of a place called Ber near Pontedeume.
Pontedeume is a really nice town and Ber beach is an excellent one getting the warm and current free waters of the sheltered and shallow Ria de Betanzos but facing the opening of the ria enough to also pick up decent waves from time to time.
Unfortunately, however, Ber was developed in a cheap and nasty and incredibly insensitive fashion back in the 70s or 80s and so it is composed of the ubiquitous (for that bit of coastline) campsite, a series of ugly blocks of flats in its centre and a surrounding ring of newer villas merging it with the older hamlet of Boebre.
In the summer Ber is full and there are a couple of little local shops and several cafes and restaurants. The other 9 months of the year it’s a ghost town. Boebre has a baker’s shop, an infant school and a bar but otherwise all facilities are 5km away in Pontedeume. Ber is also in the Concello of Pontedeume, which is an important point as that’s what determines which schools and medical centre you have access to and also what your annual property tax payments are.
The property’s exact location and Ber’s centre
View the property and consider its potential
So far what I’d found out really didn’t, for my tastes, detract significantly from the property so it was time to go and see it. Of the two agents listing it I obviously chose to contact the one with the 80.000€ lower price and a viewing was booked. Arriving at the house it was immediately obvious that the photos on the advert were probably at least 5 years old and that since they had been taken the owners hadn’t been keeping up with even basic maintenance of the building and the bare minimum had been done to keep the garden under control.
Inside the building reeked of mold, the kitchen was at the end of its life and many of the window shutters didn’t work. Outside the woodwork of the balcony railing and the gate was warped and rotting in places.
These things were all fairly minor or at least not things I was overly concerned about, but I also spotted two big issues with the structure.
The first was that the retaining wall holding the entire terrace in place was leaning and had cracked away from the stairs and base of the terrace.
The second was that the steel reinforced columns that are the supporting structure of a frame build house such as this one were splitting open.
This is a potentially massive problem caused by water penetrating the column as far as the steel reinforcement (either due to the column not being painted or faced with a waterproof surface or to the reinforcement being wrongly placed when the column was constructed). The only way to find out the extent of the problem is to hack away concrete to expose the steel and keep going until you encounter uncorroded steel …and of course hack too much and your house can suffer structural problems.
One structural beam under the balcony that has already split and significant cracking and loose stone cladding is evidence that the same thing is happening to all the main structural columns on the sea side of the house:
These were some major negatives but the location was undeniably stunning and also remarkably tranquil and peaceful for a place on the coast close to towns and cities.
The other plus was that below the two storeys that formed a functional if not generous 5 bedroom, 3 bathroom house was a 120m2 basement with a good ceiling height of 2.4m. With a frame build house there are almost no structural issues with cutting new holes for windows and doors and so, allowing for a loss of 10-20cm to lay a new floor with damp proofing, lots of insulation and underfloor heating, the scope was there to greatly expand and improve the house within its existing shell.
With some documentation (Nota Simple, Escritura, tax, water and electricity bill payments) provided by the agent I went away to get a better understanding of the cost of fixing the problems and also to do some checks on the property.
From some quick measurements taken during the viewing, the two floors of living accommodation and basement underneath were:
…but the potential of this house was the unrestored 120m2 basement which was making zero use of its fabulous south facing views. My renovation plan for it would have allowed the old, grotty kitchen on the floor above to be removed and that kitchen space knocked into the dining room/living room to form a large L shaped lounge.
The basement would then have featured a new 67m2 (with only 2 structural columns breaking it) kitchen/diner/family room opening onto the terrace and garden.
Properties within 100 metres of the coast cannot be expanded and so this renovation of existing internal space would have provided legitimate additional living space and also would have added considerable value to the property.
Check the documentation
At this stage I was still very much in love with this house, or rather what I could turn this house into. I was, however, keen to see if all the documentation was in order.
With any property purchase the documentation should be carefully checked, but in Spain there are extremely strict laws (complete with draconian fines) governing development within the coastal zone.
Within 100 metres of the coastal demarcation no new building has been permitted since the year 2000, and within 20 metres of the demarcation all development of any kind is prohibited. The swimming pool for this house and a big bank of solar panels for heating it was clearly within the 20 metre zone and I wanted to be sure that it had all the necessary permissions, as well as all the normal checks.
What the various documents provided by the agent showed were:
- All the property taxes were up to date (if they aren’t the purchaser can be liable for up to 5 years’ back taxes) and also the house was connected to a public water and electricity supply, which is an important point as these public supply connections are required to legitimise a property within the 100 metres coastal zone.
- The Nota Simple from the property register showed me that the owners were in fact British and that the registered details (ie. size and accommodation type) of the property corresponded to the actual property. It also showed two potential concerns, first that there were two mortgages on the property and second that there was a registered charge against the property in favour of Costas, the Galician coastal authority, possibly entitling them to take possession of a chunk of the garden.
That there were mortgages on the property was something of a concern because in theory you could pay a deposit to buy the property, which in Spain is always paid direct to the sellers (they don’t seem to use escrow, which would be much safer), and before you were able to complete the purchase the bank with the mortgage might repossess the property and in that case although you would have the right under law to try to reclaim your deposit from the proceeds of the bank’s sale of the house, your claim would come after theirs in the queue.
In this case the mortgages were only worth about 25% of the asking price so this wasn’t a major concern and I was also able to find out from the relevant bank that there were no repossession proceedings ongoing or being considered by the bank in respect of those mortgages.
The charge in favour of Costas was a concern and so I raised this with the agent, who apparently hadn’t noticed this issue. He then did a lot of running between the Concello, Costas and the property registrars and it turned out that a decision had been made in 2004 by Costas not to seize any of the garden and so this charge could be removed from the property register – seemingly no-one had got round to doing it before.
The final thing that stood out from the Nota Simple was that it made no mention of the swimming pool, and normally you would have expected it to.
- The copy of the Escritura from the purchase was a surprising document to get from the agent at this early stage of enquiry as it is the purchase deed and contains a lot of personal infomation and also the sale price. I suspect it was made available because it showed a 2003 purchase price of 360.000€ (and note that back then purchase prices were often significantly underdeclared to reduce taxes for both parties) and thus made a 2013 asking price of 370.000€ seem a bargain
That was interesting to know but what really caught my eye was an unusual section entitled “renuncia a la informacion registral” in which the notary stated that because both parties were in a hurry and the buyers had declared themselves happy with the assurances of the seller he had notarised the sale without the usual set of documents from the property registrar and thus without confirmation that all the permissions for the property were in place.
Additionally the house, although it had a certificate of completion of building works from 1981, had only been legalised with planning permission (presumably retrospectively during an amnesty period preceding a new Costas law) in 1996, and again there was no mention of the swimming pool.
My suspicion was therefore growing that despite being in the most heavily protected coastal zone the swimming pool had no permissions whatsoever.
- Checking the Planeamiento Urbanistico for Pontedeume online I also noticed one other relevant issue which was the liklihood of major future development in the near vicinity.
In Spain each local council is required to maintain a development plan for the town that must be updated at least every 10 years. Pontedeume’s development plan is from 1994 and so massively out of date, but what it showed was a proposed development of dozens of small, tightly packed holiday homes just up the hill from the property (which I’ve marked in green on top of the development plan picture):
With the out of date council plan plus new laws governing development in general proximity to the coast, not to mention a lot of fingers being badly burned in the early 2000s construction boom, it’s far from certain whether this development would ever come to be built BUT the land which is currently hillside with tall pines (see photos above) is zoned for development and, as can be seen from the Catastro (Spanish national property register) is one unusually large plot of land that has obviously been assembled by a construction company in order to develop it. So someday something will probably be built there and it will mean the loss of some of the rural character, possibly the gain of a small park and some tennis courts shown on one plan as part of the development, but most importantly several years of construction site noise and dust.
The property (shown in green) and the nearby large piece of land clearly put together by a construction company (in yellow). The black lines denoting other plots of land show how abnormally large the yellow plot is.
Having made the most of the various issues I had now got the price down to 317.000€ but I was still being frustrated by the seller’s agent insisting that the pool not having permissions was not a problem on the basis that the chief of Costas was a friend of his and he had assured him (just verbally, of course) that there was no problem with it!
My own enquiries (using a lawyer specialising in this area) had indicated that the pool was built sometime between 1990 and 1998, these years being when it last didn’t and when it first did show up on the Galician government’s aerial photos used for planning enforcement.
This actually meant that, because it complied with the planning regulations in force at the time, it was very probably retrospectively legalisable BUT it would require a full architect’s project and payment of the construction/improvement tax plus backpayment of 5 years of increased council tax (my estimate was a total of 10.000-12.000€) …or the purchaser could just take the risk that no-one in officialdom ever noticed that it was illegal and thus no problem ever occurred with it.
In summary, then, we had some weighty negatives:
- A swimming pool in the protected Costas zone with no permissions that would be expensive and possibly also difficult to legalise.
- Potentially very serious/expensive structural issues with the principal support columns and a retaining wall.
- The house requiring almost complete modernisation including a replacement kitchen.
- The small local town being rather run down and grotty.
- A potentially massive new development planned behind the house.
- A price that we felt was going to make the total cost too high for our limited budget and that was also quite high for the market conditions at the time.
- A total cost that we couldn’t really calculate against our budget because of the unknown extent and therefore costs of fixing the problems with the house.
…and two big positives
- An absolutely awesome setting the like of which is very difficult to find.
- Loads of potential to legally improve the house within the existing shell and, with significant additional investment, make a genuine dream property.
As it turned out I told the agent that I wouldn’t buy at 317.000€ and whilst waiting to see if the house came through the summer unsold and thus made the sellers consider lowering their asking price a different and more practical (albeit less inspiring) house came up at an astonishingly good price and so we bought that instead.
The Ber beach house didn’t make it through the summer unsold and as of August 2014 it has a new owner who was hopefully aware of its various problems when they agreed to buy it.
And yes, I (unlike my wife) do still have some regrets.
There are a few things that this case study shows:
- Galicia has some real property gems.
- …and if you find one you should really get someone else to do checks, negotiate and generally keep you sane because when a house hooks you it’s easy to get blinded to the extent and cost of the problems!
- When you look at the cost of a Galician property you need to understand what the total cost to buy it, legalise anything that needs legalising and repair/replace anything that needs repair/replacing will be. In almost all cases this cost is considerably more than the sale price.
- Also it really is necessary to check all the documentation carefully to ensure that you’re not putting your money at risk.
You can find details of how to check the various documents as seen above and also an architectural technology overview of Galician house construction on this site, and all for free.
If, however you lack the time, Spanish or confidence that you can do this yourself, then check out the inexpensive services galiciaproperty offers to help you find, buy and also restore or develop a Galician property.